21st Annual Profile of the American Music Retailer

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21st Annual Profile of the American Music Retailer

July 11, 2011

On a state-by-state count 31, states registered a gain and 14 showed a net loss of storefronts. This is compared to last year’s report when only 21 stores had an increase, as compared to 27 states with a loss. Five states and the District of Columbia had the same net store count as last year. The largest gains were in California, Georgia, Maryland, Missouri, North Carolina and Texas. States with the largest number of net losses were Illinois, Kentucky, Mississippi, South Carolina, and Wisconsin.

Our Top Chain report (December 2010) showed a net loss of one dealership dropping below the 3-unit mark (68 total) with a total branch count of 767, three units less than 2009. Traditionally each year marks the closing of some veteran dealerships, and the past 12 months was no exception. Among the casualties were Al Corey Music Center, Waterville, Maine; California’s Ontario Music (50 years); Caldwell (N.J.) Studio of Music (60 years) Madison, Wisconsin’s Good-n-Loud (35 years); Fergus Music (Minn.); Fred Myer Piano and Organ, Ft Wayne, Ind. (58 years); and Ezzy’s Music Shop, Van Buren, Maine (62 years). On a positive note, several dealers have expanded their selling area, either through expansion of an existing location or moving to larger quarters. Daddy’s Junky Music moved from a 4,000-square-foot store in Dedham, Mass. to a 7,500-square-foot location in the same town. This past month the Music Center of St. Louis tripled the size of its Kirkwood (Mo.) to 15,000 square feet in a new location and the PM Music Center (Aurora, Ill.) doubled its size to 8,500 square feet in a free standing building formerly housing an audio outlet. Another example of maintaining the “status quo” is the recently opened Second String Music, Quincy, Ill., which opened in the same location as the former Vegas Music after the previous owner passed away. During the past year Music-Go-Round opened its first new franchisee in three years with a Natick, Mass. location. Guitar Center has revived its opening program with ten units slated for 2011. Most recent openings were in Huntsville, Ala., Louisville, Ky., Sarasota, Fla., Omaha, Neb., and number 218 in Stevenson Ranch, Calif. The new units are offering rehearsal facilities, music instruction and repairs, areas and services that were not part of the GC original format. In another area, it remains to be seen what Best Buy has for the future of its MI business. Although the company maintains about 100 music product “departments,” recent plans include downsizing their new stores and moving more aggressively into the cellular phone market with mobile phone outlets. Internet sales have become an important component of the retail picture (A Tale of Two Dealers, see second column) as the sales gap between brick and mortar and the web narrows.

While less than 15 percent of the total storefronts are headquarters or branches of the 68 chains (767 units); 20 percent of the store fronts are specialty stores having 90 percent or more selling one of the major music product categories. Fretted instruments continue to be the number one item carried by both specialty and full line dealers, with 60 percent of all outlets stocking these products. There was an overall decline in the number of specialty stores in all product categories while only sound reinforcement and fretted instruments showed an increase within full line dealerships.

A Tale of Two Dealers

As reported in the American Statesman, two Austin, Texas music dealers are moving in opposite, but similar directions: “After 50 years in business, Strait Music Co. is jumping on the e-commerce bandwagon.” The report notes that the owner Robert Strait plans to open an on line shopping site this month to accompany his retail outlet. “Entrepreneur Suman Singh is going in another direction.” In 2005, Singh opened an online site, Austin Bazaar, which sells musical instruments through online sites such as Amazon.com and Ebay.com, in addition to a company web site. He is now planning to open a retail outlet.

Austin Bazaar was formed after Singh, a former Dell, Inc. engineer, and his wife, Seetha, a violinist, started selling music products from their garage. According to Singh, he started with 10 instruments and now has a 4,000-unit inventory. The company has an 80,000 square foot facility that includes an office and warehouse and the soon-to-open 4,000 square foot store.

Strait Music is a family owned business that dates back to 1963. Robert Strait said he is “not opening an e-commerce store to compete with national chains; I would like to get people into our store and play the instruments, but a lot of people like to buy online now. We want to give them that option.”